The recent release of Canada’s gross domestic product (GDP) by industry report by Statistics Canada is a cause of concern. For the fifth consecutive month, Canada’s real gross domestic product dipped by 0.2% last May. This is leading to an emerging perception that the country is now moving closer towards a recession.
The said decrease was primarily due to decreases in the manufacturing as well as the mining, quarrying and oil and gas extraction sectors. The manufacturing sector was stagnant last April, reflecting no growth. And in May, it even went down by 1.7% as durable-good manufacturing dropped by 2.4% while non-durable good manufacturing went down by 0.7%.
Moreover, the manufacturing contracts in May amounted to $170.046 billions of chained 2007 dollars. Back in April, the said contracts amounted to $172.907 billions of chained 2007 dollars.
Meanwhile, May also saw a decrease in oil and gas extraction by 1%. Previously in April, it had gone down by 3.4%. This is primarily due to a decrease in conventional oil and natural gas extraction. Just the same, the extraction for non-conventional oil also fell.
At the same time, the mining and quarrying sector also suffered a 0.8% decline with the increase in coal mining undermined by the decrease in metallic mineral mining. However, things stayed the same when it came to non-metallic mineral mining.
As for wholesale trade, the said sector also suffered a decrease of 1% after it experienced a 1.6% increase back in April. The wholesale trade for food, beverage, tobacco and farm products may have gone up, but there were significant decreases in the wholesaling of machinery, equipment and supplies, motor vehicle and parts as well as miscellaneous items such as agricultural supplies.
In addition, the negative also outweighed the positive when it came to the Canadian finance and insurance sector as the said industry suffered a decrease of 0.3% despite an increase in financial investment and insurance services.
Meanwhile, the declining price of oil is not good for Canada, reports CNN Money. Lower oil prices are affecting earnings of big oil companies who are now forced to delay projects and/or cut their spending.
And with Goldman Sachs reporting that the price oil could stay at about $50 through 2020, Canada’s future is looking pretty bleak.